Main Difference Between Self-Employment vs. Independent Contractor

By hrlineup | 21.12.2020

It does not matter whether you are an employee or an independent contractor. What is important is the client’s satisfaction. The status of your employment affects each part of your business. So, it is essential to understand the work of a self-employed vs. independent contractor.

Self-employed individuals run their businesses or are in partnerships. Employers hire them for long-term projects hence creating an employer-employee relationship. Independent contractors, however, are self-employed workers who provide services specifically on a short-term contractual basis.  So, what are the main difference between contractors and self-employed? Find out below.

Behavioral control

Behavioral control refers to the way a client controls how to handle a job. It usually applies to the self-employed service provider. The company can give instructions on how to work or offer training to the employee. These instructions can vary from where to purchase working materials to what time the employee needs to complete the job. Once the employee completes the job, the client can also evaluate the details and offer their feedback.

On the other hand, the independent contractor works but uses their skills and time to get the job done. Employers only get to evaluate the results.

Financial control

When it comes to self-employed vs. contractors, the employee is likely to receive payment over a certain time, for example, hourly, weekly, or monthly. Here, the client controls their financial feature because they provide all the work materials.

Contractors, on the other hand, purchase materials at their own expense and carry them to work. Employers pay them after completion of the job. They also are most likely to incur losses because of the expenditure of the ongoing assignment, which may exceed their earnings. And once these kinds of losses happen, there will be no reimbursement from the client.

Type of relationship

A contractor can hire a self-employed sub-contractor. The way they relate to the client also tells a lot about their status. Both the independent contractor and employee can have written and law binding contracts. So, what differentiates them?

When an employer assigns an important task to a worker, it is evident that the employer will control and monitor how they execute it. Controlling and monitoring tasks by an employer make such workers employees. They most likely will benefit from the company, for example, insurance and vacation benefits. They also have a long-term relationship with their clients resulting in staying longer. Unlike them, the independent contractor is not enjoying such benefits.


When it comes to independent contractor vs. self-employed, clients must consider all these factors before deciding who to hire. It may vary from the nature of work to a period in which an employee completes the job. Both are good at their job areas. Who is more suitable?